No one prepares you for a pandemic, it just happens and you have to learn to survive through it. The COVID-19 pandemic has not only disrupted our lives but also magnified the money issues a lot of us struggle with daily. In unprecedented times such as these, you simply cannot afford to take your finances lightly. As we learn to live with the virus, we should learn to adapt our financial situations to the new normal.
Are you in the post-lockdown recovery phase or still trying to stay afloat with your finances? Undoubtedly, there’s a lot of uncertainty in the year 2020, but don’t cancel the year yet.
To survive financially in this COVID-19 era, you may need to be a lot more strategic with your finances. Start by avoiding common money mistakes and handling your finances effectively. Here are four (4) common ones you should avoid if you desire financial stability during and after the pandemic:
1. No Emergency Fund.
During the lockdown, people who lost their jobs and had sources of income shutdown realized too late the importance of saving for the rainy days. One mistake a lot of people make is not having a fund set aside for unexpected events and emergencies. The pandemic has driven home that point.
To avoid this mistake, start building an emergency fund with an instrument that is low risk, provides liquidity and competitive returns like mutual funds. You should check out the Cordros Money Market Fund. If you already have an investment in mutual funds, invest consistently to keep it active and growing. You never know when you might need it!
2. No financial plan for the year.
At the beginning of the year, we held a webinar on financial planning. We wanted people to understand that financial planning is important for financial stability. Financial planning involves understanding your cash flow, creating a balance between income and expenses, investment strategy, reviewing finances of the past year, and so on. Without a proper financial plan, there is nothing to keep you on track and help you make the right decisions for your financial future.
3. Spending more than you earn.
One mistake a lot of people make is mixing up their wants and needs. This usually results in spending half of what you earn on unnecessary desires. Most times, you’d find yourself asking, ‘’Where did all the money go?’’. To survive the pandemic, you need to create and stick to a weekly/monthly budget. This will help you get a grip on your impulsive spending habits. If you continue to spend more than you earn, you risk running into financial crisis and possibly debts every single month.
4. Not putting your money to work.
Alas! One of the biggest money mistakes people make is not putting their money to work. To achieve financial freedom, you must learn to make your money work for you. Doing this helps you create a passive income, for which you do not have to lift a finger. How can you put your money to work? By investing it in financial assets that provide competitive returns and other benefits. The great part about investing is that you get to diversify your investment portfolio by choosing a variety of investment options. This translates to having more sources of income.
These mistakes may seem inconsequential but they come with significant ripple effects on your finances. Now that you understand that these mistakes can cost you your financial stability, you need to learn how to avoid them and actively work towards having a secure financial future.
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